Apr 20, 2009
For those of you that have not been following the progression of the global financial meltdown over the last six months, then 2012 will be a year to remember in the UK for more than just the hosting of the Olympic Games.
Financial year 2011/12 is expected to be the crunch year for public finances, as the government of the day desperately tries to find budget savings in order to offset the costs of the vast sums that it has borrowed in order to save some of the largest banks and other financial institutions. A General Election will need to be called by May 2010 and regardless of which Party wins it, they will be faced with the need for significant reductions in public expenditure. For local government, this is likely to mean real reductions in financial settlements.
Chief Executives and Treasurers across the country are already planning for this event, and procurement teams are expected to make a major contribution to the delivery of cashable savings which could reach double digit percentages. With an 18 month lead time between launching a major procurement exercise and accruing the savings, activity has to start in this financial year (2009/10).
If that is a shock to some, the other message is that targeting the usual suspects (commodities) for more savings and putting in place yet another framework contract simply won't be enough. Savings need to come from the high value areas; contracts need to be revisited to ensure performance, eliminate waste, and collaborative contracting must rapidly accelerate. Those that are planning now are in with a good chance of delivering their contribution to tough targets. Those that don't may well find themselves as the contribution by way of a P45.